The 7 Best Credit Cards To Build Credit
We’ve all heard people talking of credit and how it might impact your ability to get a loan or even a good apartment. However, many people fail to know that they can use credit cards to build their credit. The trick is knowing the best credit cards to build credit and how to use them.
The best 7 credit cards to build credit are:
- Capital One Secured MasterCard
- OpenSky Credit Card Secured Visa
- Citi Secured MasterCard
- Petal 2 Credit Card
- Deserve Digital First Card
- Discover It Secured Credit Card
- Capital One Journey Student Rewards Secured Credit Card
That’s not all, as you still need to know the seven best credit cards you can use to build credit. It’s also critical to know how you can build credit, understand the meaning of credit, the importance of good credit, and what’s a good credit score, which you will learn if you read on.
How can I Build Credit?
On average, the easiest way for anyone to build or rebuild credit is by using credit cards. You can try a secured card that requires a security deposit or have someone co-sign with you on an unsecured credit card. You can also take credit on the bills you pay to boost your credit record.
However, you still need to make smart financial decisions and avoid being late on your bills and interest repayment. It’s also critical to know that it’s not an overnight process, and it would take time to improve your credit.
What is ‘Credit’ in the World of Personal Finance?
The term ‘credit’ is often used to determine your capability to pay the lender, and it’s summed up into a number. Your credit score is your financial trustworthiness, and it’s subjected to monthly changes depending on how you performed in that given month.
Lenders rely on your credit information to determine how likely you are to repay the debt. The higher the credit score, the more likely you are to repay the loan. Your creditors get this information from three different credit bureaus, namely:
- Experian
- Equifax
- TransUnion
Failure to repay interest rates or accumulating debts will most likely land you in a poor or fair credit range. The best you can do is to improve your credit score and move up to the ‘good credit rating.’
Why do I need Good Credit?
A good credit score goes a long way in determining your financial trustworthiness. While it’s perfectly okay not to have any credit score, it also means you have to save a lot to afford things that people with credit can afford.
On the other hand, a good credit score opens you to numerous opportunities like:
- Buying a house – you’re more likely to get a great mortgage deal when you have a good credit score.
- Borrow more money – a good credit will allow you to borrow more at a lower interest rate.
- Finance a car – you can get a good deal to finance your car with good credit.
- Access credit cards with favorable terms – some credit cards require a good credit score to access them.
- Job hunting – some recruiters would prefer hiring someone with a good credit score to someone with a poor credit score.
- Renting an apartment – you need to show your landlord you’re capable of paying your rent, and this reflects on your credit score.
What’s a Good Credit Score, and what are the Credit Brackets?
A credit score is a sort of rating where you’re assigned points based on your financial decisions, such as repaying loans and your credit card interest. The points tally begins at 300 points, being the lowest, and goes up to 850 points being the highest. A good credit score is anything in the middle, starting at 670 points going upwards.
There are six categories of credit brackets that highlight how the points are awarded. Learning about them might help you determine where you lie and where you need to aim to get to a healthy financial bracket. They include:
- No credit – this is for people who have never had an active credit account, never taken a loan, or had a credit card.
- poor credit rating if you score between 300 and 579 points
- Fair credit rating if you score between 580 and 669 points
- Good credit rating if you score between 670 and 739 points
- Very good credit rating if you score between 740 and 799 points
- Exceptional credit rating if you score between 800 and 850 points
The 7 Best Credit Cards to Build Credit
If you have a bad credit score and would like to hike it up, opening a credit card is the easiest way to achieve this, but you need to exercise caution with your financial behavior. It’s also critical to know the type of credit card you need since some have strict pre-qualification conditions that somewhat limit anyone with bad credit.
Not all credit cards will accept you, especially if you have poor credit. That’s why you need to try the following:
- Secured credit cards
- Unsecured credit cards
Secured credit cards are the easiest to get since they require a security deposit that acts as collateral to your loan if you don’t pay the loan. The security deposit varies with credit card companies, but it’s mostly within hundreds of dollars.
Unsecured credit cards are an upgrade from secured ones since they don’t require any security deposit. They have higher credit limits and lower fees, providing you with better financial options. However, getting accepted for unsecured credit cards is not easy if you have a poor credit score.
Here are the best credit cards you can use to build your credit:
1. Capital One Secured MasterCard
Capital One Secured MasterCard is the best credit card for people with a bad credit score. For starters, you can start with a $200 initial credit line, but you’ll have to pay $49 as a refundable security deposit. It also offers no annual fees, no penalty APR, no foreign transaction fee, and a 26.00% purchase APR. However, there is a $40 late fee.
What’s even better is the possibility of getting a credit extension after six months without any additional deposit, but you have to prove you can sustain the new credit limit by making timely payments.
To help you deal with unauthorized charges, the secured credit card offers you a $0 Fraud Liability, giving you peace of mind in case your credit card information was stolen. Capital One allows you to monitor your credit using their cutting-edge CreditWise, which is free and provides accurate information.
2. OpenSky Credit Card Secured Visa
OpenSky Credit Card is perfect for people who prefer no credit check and have a limited credit history. It allows a security deposit from $200 to $3000, 3% on foreign transaction fee, $25 return payment fee, $35 annual fee, and a $38 late fee. The card comes with a 17.39% variable purchase APR and with no penalty APR.
Grow your credit score using this card in less than six months, and you can get your credit history on the three major credit bureaus. It’s the best way to build your credit since the lender doesn’t need your credit history.
3. Citi Secured MasterCard
If you don’t have a bank account or are not willing to share this information with your lender, Citi Secured MasterCard is the perfect card for you. For starters, the card helps you build your credit history fast since it reports your monthly repayments to the three credit bureaus.
The card requires a $200 minimum security deposit which also acts as your credit line. There are no annual fees, a 3% foreign transaction fee, $40 returned payment fees, and a $40 late fee. There is also a 3% balance transfer fee and a 22.49% regular balance transfer APR
The credit card has a 22.49% purchase APR and a 29.99% penalty APR. You can still use this card worldwide, where MasterCard is accepted.
You can use a mobile app or your phone to manage your account any time of the day. Due to their flexible due dates, it also allows you to make payments in the beginning, middle, or end month. After a responsible use, Citi cards can offer you an upgrade to their unsecured cards.
4. Petal 2 Credit Card
The Petal 2 Credit Card is a perfect credit card for people with no credit, fair credit, and poor credit. The credit card offers rewards in terms of cashback in several ways. There is a 1.5% cashback after making 12 monthly payments on time, 1% cashback but only on select purchases, and 2% to 10% cashback when purchasing from select merchants.
In terms of fees, the card charges no annual fees, balance transfer fees, and foreign transaction fees. The regular APR ranges from 12.99% to 26.99% and has a maximum credit limit of $10,000. There is a minimum $200 security deposit which also acts as your credit line.
5. Deserve Digital First Card
Deserve Digital First Card has been considered the best option for international applicants for several reasons. First, no security deposit is needed, no credit check or credit history is required, and you don’t have to pay any fees for any purchase outside the US.
There are no fees whatsoever, and the regular APR stands between 14.99% and 24.99% variable. You also get a 1.5% cashback as a reward for using the card.
6. Discover It Secured Credit Card
Discover It Secured Credit Card has a lot of benefits such as rewards and no annual fees. You’ll get a 20% cashback on purchases equaling $1000 quarterly. You also get 1% cash back on gas stations and restaurants and every other purchase.
To sweeten the deal, Discover matches every cashback you get at the end of the first year as a welcome bonus.
The card is perfect for people with bad credits and it has no annual fees, foreign transactions fee, or penalty APR. Discovery reviews your credit history every eight months to determine whether you qualify for a credit limit increase. You only need a minimum deposit of $200 to get started.
7. Capital One Journey Student Rewards Secured Credit Card
This credit card is great for building your credit since it allows people with minimal credit history to apply. There are no annual fees, penalty APR, or foreign transaction fees. On top of that, you get 1% cashback on all purchases, and if you pay on time, this goes up to 1.25%.
The lender sends your monthly credit history to the three credit bureaus, helping you grow and improve your credit. After six months, they’ll review your credit history to determine you qualify for a limit increase.
In Conclusion
Maintaining good credit is critical since it allows you access to more loans, better interest rates, and transactions such as buying a home and financing a vehicle. Using credit cards to grow your credit score is the easiest and fastest way to achieve your financial goals. However, you should choose a credit card with a lower security deposit and accept people with poor credit histories.
